Is it socially efficient to impose job search requirements on unemployed benefit claimants with hyperbolic preferences?

Bart Cockx, Corinna Ghirelli and Bruno Van der Linden

Journal of Public Economics, 2014, vol. 113, issue C, 80-95

Abstract: DellaVigna and Paserman (2005) and Paserman (2008) have shown that imposing job search requirements on sophisticated unemployed benefit claimants with hyperbolic time preferences is Pareto improving in that it raises welfare for the unemployed, by limiting harmful procrastination, and for employees, since the enhanced search boosts the job finding rate, thereby reducing the contributions required for the funding of benefits. This paper demonstrates that the range of Pareto improvements is much reduced if the analysis takes into account the fact that benefit claimants may not comply with the requirements, especially if the monitoring technology displays imperfections induced by caseworker discretion or measurement error.

Keywords: Job search model; Job search monitoring; Non-compliance; Measurement error; Hyperbolic discounting; Social efficiency (search for similar items in EconPapers)
JEL-codes: D60 D90 J64 J65 J68 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:113:y:2014:i:c:p:80-95

DOI: 10.1016/j.jpubeco.2014.03.006

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